Local Indian cold rolled coil (CRC) prices have increased by INR 750/mt ($10/mt) to INR 38,200/mt ($534/mt) ex-works during the past week, but the trend is unlikely to be sustained in the coming weeks as economic headwinds would put renewed pressure on prices, market sources have told SteelOrbis.
According to traders, the CRC market had firmed up largely on expectations that the slight revival in automobile sales would gather momentum. But this was unlikely to happen in view of extremely negative economic indicators announced late last week, while the current CRC market is behind the curve and will react with a time lag once the impact of the fresh negative news has been felt by producers and end-users.
The government late last week announced a gross domestic product (GDP) growth for the July-September period this year of 4.5 percent, the worst performance of the economy in any quarter over the past six years.
“Clearly the news of the worse-than-expected performance of the economy is yet to sink into the local CRC market players. Domestic steel mills are expected to start announcing current month prices from later this week. But higher levels are unlikely to be sustained amid negative indicators and the steel mills might be forced to lower base prices,” a Mumbai-based trader said.
The slight improvement in automobile sales seen in October has not been sustained in November. Maruti Suzuki, the largest domestic passenger car manufacturer, posted a 3.3 percent decline in November sales against a slight rise of 2.3 percent in October. Honda Motors reported a decline of more than 50 percent in November sales, both for domestic and export sales. “These performances will impact local CRC prices as the market absorbs the negatives,” the source said.
$1 = INR 71.60